My response to the FCA report on foreign exchange market manipulation

This is yet another shocking scandal involving the banks and underlines the need for fundamental reform and cultural change.

It is right that the banks involved have been fined, but the Serious Fraud Office must also have the resources it needs to pursue the individuals involved. The public needs to know that individuals involved in or who had knowledge of fraudulent activity will now be held to account, including with criminal prosecutions.

We called back in 2012 – during the passage of the Financial Services Bill – for financial benchmarks like those in foreign exchange to be properly regulated, but Ministers refused to act. Now we find out this activity was going on as late as last October – over a year after the Libor scandal was exposed and we raised concerns.

This report shows that reform of our banks has a long way to go. We need reforms to pay and bonuses, with more transparency, greater clawback and a tax on bank bonuses. The Vickers reforms need to be properly implemented, not watered down, with back-stop powers to break up the banks which Ministers have been blocking. And we need much more competition, including at least two new challenger banks, which is why we welcome the CMA inquiry we have long called for.

Banks have a vital role to play to make our economy work but that requires the public and businesses to trust the way they operate. This scandal once again badly undermines that trust and makes the task of reform and cultural change both harder and more important.

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Posted November 12th, 2014 by Ed